The Portugal Golden Visa investment immigration program has propelled a remarkable economic turnaround in a country blighted by the impact of the 2008 global meltdown.
With four out of every ten young people without a job, general unemployment close to 20 per cent and facing a 3.2 per cent contraction in its economy in 2012, Portugal was one of the nations to be hit hardest by the global economic crisis.
Aided by a €78 billion bailout from Europe and the International Monetary Fund (IMF), a three-year austerity program saw the Portuguese economy start the painstaking recovery process in 2012, which was also the year in which the country announced its Golden Visa.
Golden Visa to the Rescue
Portugal’s Golden Visa is an investment immigration program that offers permanent residence to anybody investing €500,000 in the country’s real estate sector. Over the years, the program has undergone numerous changes including the addition of investment options for business start-ups and arts and culture.
A lower real estate investment threshold of €350,000 was also introduced for the renovation and rehabilitation of buildings in specified areas.
Investment Requirements: Golden Residence Permit
|Capital Investment||Transfer of capital of minimum value of EUR 1 million into Portugal including through purchase of shares of companies|
|Job Creation||Creation of at least ten job positions in Portugal|
|Real Estate||Purchase of unencumbered real estate in Portugal of a minimum value of EUR 500,000.|
Co-ownership or purchase of property through finance is permissible provided each individual makes a mandatory minimum investment of EUR 350,000.
|Urban Rehabilitation||Investment of at least EUR 350,000 in constructed 30 years ago or investment for rehabilitation of properties located in Urban Rehabilitation Areas|
|Scientific Research and Development||Investment of at least EUR 350,000 in R&D activities of institutions that are part of the national technological system.|
|Promotion of Culture||Investment of at least EUR 250,000 towards financing of bodies pursuing cultural or artistic activities or towards renovation or maintenance of cultural heritage.|
|Small Cap and Mid Cap Finance||Investment of at least EUR 350,000 towards purchase of units of small-cap or mid-cap venture capital funds.|
|Business Creation or Investment||Investment of at least EUR 350,000 in a new commercial activity creating at least 5 jobs, or in an existing commercial activity to create or maintain at east 5 jobs.|
|Investment in Low Population Areas||20% reduction in minimum investments in the above-mentioned categories when investment is made in a low population density area.|
This reduction is not available to investors contributing EUR 1 million or more and investors opting for Small and Mid Cap Finance category of the Golden Visa program.
The Golden Visa program requires the applicant to be physically present in the country for just seven days in a year to maintain his/her PR status. A candidate has the option of applying for citizenship after six years of permanent residence.
While the country’s economic recovery cannot be attributed solely to the program, it has been a key tool in helping Portugal attract valuable foreign investment.
Ample Scope for Future Growth
Despite the impressive turnaround from contraction to expansion in just five years, Portugal still lags behind in terms of economic performance among countries within the European Union.
Conventionally, real estate investments generate returns over a long period of time through slow and steady appreciation in the value of the asset. Buying residential property in Lisbon or other tourist hotspots in the country offers Golden visa applicants the dual advantage of capital gains as well as recurring rental income.
Currently, the real estate sector generates 10 per cent annual appreciation in the value of the property with scope for an additional 5 per cent income by letting out the property as a holiday home.
Portugal has issued more than 5,500 Golden Visas against total investments in excess of €3.5 billion, of which more than 90 per cent of total number of applications and total value of investments have been pumped into the real estate sector.
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